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<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="http://www.gettyimages.co.uk/license/73225198">Getty Images</a></span></p></div><p></p></div></div></p><p>Japan's yen is unstoppable at the moment, climbing to its highest level against the dollar since 2014 in Asian trade on Monday.</p><p>The Japanese stock market, which is dependent on companies' ability to export, has taken a beating and as a result foreign investors aren't hanging around to wait for the yen to weaken.</p><p>Foreign investors have sold as much as 10.8 trillion yen ($102 billion) of stocks since June 2015, when holdings were at their peak, according to CLSA's Japan analyst Nicholas Smith.</p><p>Foreigners account for about 70% of the traded value of Japanese stocks and have sold 43% of the Japanese stocks they bought since Prime Minister Shinzo Abe came to power in 2012, according to CLSA.</p><p>BlackRock, one of the world's biggest asset managers, is reducing its position in Japan, <a href="http://www.bloomberg.com/news/articles/2016-04-10/abenomics-rebuked-as-blackrock-joins-46-billion-japan-pullout">according to Bloomberg News</a>, with foreign traders pulling out of Japanese stocks for 13 straight weeks.</p><p>This is bad news for Japan because local investors don't trade much, so the foreign funds play a big role in driving the stock market forward.</p><p>Here's Smith (emphasis ours):</p><p style="padding-left: 30px;">Domestic institutional money is overwhelmingly passive in character. So when foreigners, who account for typically 70% of traded value, repatriate their money,<strong> there's no pool of capital with the experience and conviction to decide the price is right. Stocks generally don't recover till the foreigners returns.</strong></p><p>And here's the chart:</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>CLSA</span></p></div><p></p></div></div></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/hamilton-makes-over-2-million-month-producer-jeffrey-seller-broadway-musical-theater-2016-4">Broadway's biggest hit 'Hamilton' is making over $2 million a month - here's why the producer thinks it could be making a lot more</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="hqaGdtMjE6TuOLd1QuJ1UzvqOkB9_J_a" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Foreign investors are selling up in Japan

<br /><ul><li><strong>The recent militant attack in <keyword id="43212" type="LOCATION" weightage="20" keywordseo="Pulwama">Pulwama</keyword> and its subsequent fallout is not only hurting India’s small business owners, but it’s capital markets too. <br /></strong></li><li><strong>As a result of the attack, the Sensex fell for nine consecutive days - its worst streak in eight years.<br /></strong></li><li><strong>To make matters worse, <keyword id="58959" type="ORGANIZATION" weightage="20" keywordseo="Foreign-investors">foreign investors</keyword> also pulled out ₹62 billion of funds from debt and equity markets in the three three days following the attack. </strong></li></ul>It seems that the recent militant attack in Pulwama, wherein 45 security personnel were killed, and its subsequent fallout is not only hurting India’s <a href="https://www.businessinsider.in/indians-traders-3-5-billion-in-business-due-to-protests-post-pulwama-attack/articleshow/68059494.cms">small business owners</a>, but it’s capital markets too. <br /><br />As a result of the attack, the Sensex fell <a href="https://www.bloomberg.com/news/articles/2019-02-19/sensex-breaks-longest-losing-streak-since-2013-on-rbi-cash-boost">for nine consecutive days </a>- its worst streak in eight years. To make matters worse, foreign investors also pulled out of India’s debt and equity markets.<br /><br />Around ₹62 billion of funds from foreign portfolio investors (FPI) left India’s markets in the three three days following the attack on February 14th, according <a href="https://indianexpress.com/article/business/pulwama-attack-spooks-markets-fpis-pull-out-rs-6200-crore-5593711/">to media reports</a>. This eclipses the <a href="https://www.financialexpress.com/market/fpis-pull-out-rs-5300-crore-from-capital-markets-in-january/1474109/">₹53.6 billion</a> worth of FPI outflows seen in the month of January. <br /><br />More importantly, this completely undoes the inflows that followed in the wake of the Modi administration’s populist interim budget announcements. Around ₹56 billion worth of foreign investor funds entered the country between February 1st and February 14th. <br /><br />Indo-Pak tensions have heightened in the aftermath of the attack. In addition to the deployment of troops on the border and in the Kashmir valley, India revoked “most favoured nation status” to Pakistan and imposed <a href="https://www.business-standard.com/article/economy-policy/pulwama-attack-india-s-200-duty-is-as-good-as-a-ban-on-pakistani-imports-119021800243_1.html">a 200% duty</a> on imports from the country.<br /><br />Meanwhile, <keyword id="14676" type="PERSON" weightage="20" keywordseo="Imran-Khan">Imran Khan</keyword>, the Prime Minister of Pakistan, announced that the country would <a href="https://www.businessinsider.in/pm-imran-khan-warns-india-it-will-retaliate-if-attacked-following-pulwama/articleshow/68062020.cms">retaliate in kind </a>if it was attacked. <br /><br />Geopolitical stability is always an important factor whe foreign investors evaluate investment opportunities in emerging markets. If the current tensions persist, the outflows will likely continue. Not only will this hurt India’s currency, but it could provide a dampener on economic growth. <br /><br />Amid the exodus of foreign investors, domestic institutional investors were left to keep the market afloat, pumping ₹43.5 billion into <keyword id="35199" type="PERSON" weightage="20" keywordseo="stock-markets">stock markets</keyword> in the same three-day period. This prevented what could have been an even more drastic fall in the Sensex. <br /><br />Furthermore, in alignment with global trends, gold prices in India got a boost as investors piled into the safe haven asset, driving prices 2% higher to ₹34,680 per ounce by February 19th. <br /><br /><br />SEE ALSO:<br /><br /><a href="https://www.businessinsider.in/indians-traders-3-5-billion-in-business-due-to-protests-post-pulwama-attack/articleshow/68059494.cms">Indians traders lose $3.5 billion in business due to protests post Pulwama attack</a><br /><br /><a href="https://www.businessinsider.in/pm-imran-khan-warns-india-it-will-retaliate-if-attacked-following-pulwama/articleshow/68062020.cms">Pakistan PM Imran Khan says the country will retaliate if India attacks</a><br />

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Foreign investors are selling up in Japan

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The Pulwama attack has scared foreign investors away

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